Lake Forest's proposed budget for the 2014 fiscal year is nearly 10 percent larger than its current one, boosted by more than $6.6 million in state and federal grants.

With its AAA bond rating intact, Lake Forest weathered the recession better than some municipalities. But finance director Elizabeth Holleb said the city's economic forecast remained difficult to predict. As a result, fiscal prudence remains central to its financial agenda, she added.

"We have positioned ourselves well to not have any unexpected surprises in fiscal year 2014," Holleb said. "There do seem to be signs of economic recovery, but they're small and inconsistent."

Holleb said the city's cautionary approach is reflected in its proposed $82.7 million budget for the upcoming fiscal year, which starts May 1. She said the city continues to look for ways to save money, whether by sharing emergency-dispatch services with nearby towns or by controlling rising pension and insurance costs.

General fund expenses, which include personnel costs, are expected to be 1.3 percent lower than in the current fiscal year. And excluding three large, grant-funded projects, overall spending is estimated to increase a mere 0.82 percent.

The new budget estimates Lake Forest will have $13.5 million in its general fund reserve by the end of the 2014 fiscal year. That's 23 percent more than the city's fiscal policy requires — another example of the affluent North Shore suburb's financial health, Holleb said.

A 2.4 percent increase in projected general fund revenues — led by increasing property and sales tax proceeds — provides a slight lift to the city's financial outlook.

But a proposition in Gov. Pat Quinn's preliminary state budget could cost Lake Forest more than $220,000, according to the Illinois Municipal League. The proposal is designed to help Illinois pay down its bills by freezing payments of state income-tax shares to municipalities.

Capital improvement projects outlined in Lake Forest's budget include restoring the downtown Metra station and constructing of a pedestrian underpass at the station on the west side of town. In August, the city is scheduled to start a series of renovations at Forest Park.

The budget also calls for $200,000 to combat Lake Forest's growing emerald ash borer infestation through a combination of treating, removing and replacing ash trees.

But after a lengthy debate at city hall Monday, some aldermen said they wanted to up that funding to $400,000. They contended it didn't make financial sense to put off the investment if the city knew the invasive insects would eventually kill every ash tree.

"The quicker we get to replanting, the quicker it will be replenished," said Ald. Kent Novit, referring to Lake Forest's natural aesthetics. "We can't ignore this problem."

Holleb said the additional $200,000 could come from the city's reserves or from postponing other capital improvement projects planned for next year. The finance committee will have a chance to address the issue again at its April 15 meeting, several weeks before the city council will take a final vote on the budget May 6.